MR.GIRISH H. JAIN, MUMBAI V. ITO WARD-19(1)(3), MUMBAI

ITA 1404/MUM/2018

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 5218 (ITAT-MUMBAI)
• Duration Of Justice: 7 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-10-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 07-03-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S K BEPARI
• Assessee Lawyers: DINKLE HAMIA
• Keywords: Bogus purchase
• Section: 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA, AM I.T.A. NO S . 1404 & 1405 /MUM/2018 ( ASSESSMENT YEAR S : 2009 - 10 & 2010 - 11 ) SHRI GIRISH H. JAIN [PROP. OF REGENT STEEL & ENGINEERING & CO.] 22, ROOM NO.2, 2 ND FLOOR, 23/2 5/27, GURUCHCHAYA BUILDING, 1 ST PARDIWADA, V. P. ROAD, MUMBAI - 400 004 VS. ITO, WARD - 19(1)(3), ROOM NO. 220, 2 ND FLOOR, MATRU MANDIR, TARDEO, GRANT ROAD, MUMBAI - 400 007 PAN/GIR NO. ADSPJ 9929 L ( APPELLANT ) : ( RESPONDENT ) APPELLANT BY : SHRI DINKLE HAMIA RESPONDENT BY : SHRI S. K. BEPARI DATE OF HEARING : 1 6 .10.2018 DATE OF PRONOUNCEMENT : 16.10. 2018 O R D E R PER S HAMIM YAHYA, A. M.: TH ESE ARE A PPEAL S BY THE ASSESSEE WHEREIN THE ASSESSEE IS AGGRIEVED THAT THE LEARNED COMMISSIONER OF INC OME TAX (APPEALS) - 5 3, MUMBAI (LD.CIT(A) FOR SHORT) VIDE ORDER DATED 01.01.2018 HAS SUSTAINED 100% DISALLOWANCE ON ACCOUNT OF BOGUS PURCHASES AMOUNTING TO RS. 2,95,842/ - . 2. THE ASSESSING OFFICER (A.O. FOR SHORT) IN THIS CASE HAS MADE 100% ADDITION ON ACCO UNT OF BOGUS PURCHASE AMOUNTING TO RS.2,95,842/ - WHICH WAS CONFIRMED BY THE LD. CIT(A). 3. AGAINST THE ABOVE ORDER , THE ASSESSEE IS IN APPEAL BEFORE THE ITAT. 2 I.T.A. NOS.1404 & 1405/MUM/2018 4. I HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS . I FIND THAT IN THIS CASE THE SALES H AVE NOT BEEN DOUBTED . I T IS SETTLED LAW THAT WHEN SALES ARE NOT DOUBTED, 100% DI SALLOWANCE FOR BOGUS PURCHASE CANNOT BE DONE. THE RATIONALE BEING NO SALES IS POSSIBLE WITHOUT ACTUAL PURCHASES. THIS PROPOSITION IS SUPPORTED FROM THE HON'BLE JURISDICTIONAL H IGH COURT DECISION IN THE CASE OF NIKUNJ EXIMP ENTERPRISES (IN WRIT PETITION NO 2860, ORDER DT. 18.6.2014). IN THIS CASE , THE HONOURABLE HIGH COURT HAS UPHELD 100% ALLOWANCE FOR THE PURCHASES SAID TO BE BOGUS WHEN SALES ARE NOT DOUBTED. HOWEVER THE FACTS O F THE PRESENT CASE INDICATE THAT THE ASSESSEE HAS MADE PURCHASE FROM THE GREY MARKET. MAKING PURCHASES THROUGH THE GREY MARKET GIVES THE ASSESSEE SAVINGS ON ACCOUNT OF NON - PAYMENT OF TAX AND OTHERS AT THE EXPENSE OF THE EXCHEQUER. IN S U CH SITUATION , IN MY C ONSIDERED OPINION , ON THE FACTS AND CIRCUMSTANCES OF THE CASE , 12.5 % DISALLOWANCE OUT OF THE BOGUS PURCHASES MEE TS THE END OF JUSTICE. ACCORDINGLY , I MODIFY THE ORDER OF THE LD. CIT(A) AND DIRECT DISALLOWANCE OF 12.% OF THE BOGUS PURCHASE OF RS.2,95,842/ - . THE LD. COUNSEL OF THE ASSESSEE FAIRLY AGREED TO THIS PROPOSITION. 5. I N THE RESULT , TH E S E APPEAL S FILED BY THE ASSESSEE STANDS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 16.10.2018 SD/ - (S HAMIM YAHYA) A CCOUNTANT ME MBER MUMBAI ; DATED : 16.10.2018 ROSHANI , SR. PS 3 I.T.A. NOS.1404 & 1405/MUM/2018 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. CIT - CONCERNED 5. DR, ITAT, MUMBAI 6. GUARD F ILE BY ORDER, (DY./ASSTT. REGISTRAR) ITAT, MUMBAI